Do you know, a recent study in India says that people in
the income group of Rs3, 00, 000 p.a. and below the age of 35 have between on an
average 3 to 4 credit cards, between 35 and 40 years 3 credit cards, between 41
and 50 years 1 to 2 credit cards, and above 51 1 credit card.

It also says that those who own more credit cards are
more in debt compared to others. And they pay interest rates between 18 to 36
per cent per annum. Literally paying through the nose!!!

Will anyone tell such people as financially responsible?
We will rate them as financially foolish!!! When lending rates of home loan are
at 10.5% p.a., car loans are at 11.55% p.a., consumer durable loans are at 12.5%
and personal loan at 14%, why pay credit card companies an interest rate 18% and
above. Is it not foolish!!!?

Does it mean we should not have Credit Card?

No. We should have credit card but never more than two.
It will be easier to be financially responsible if we have two and follow the
“Five Golden Rules of Maximizing Returns from Credit Card” given below:

Golden Rule No. 1: Pay 100 per cent of
your credit card bills as far as possible. This way you will reduce your
interest outgo to a bare minimum. Whenever you are in a mood to buy consumer
durables or car or improve your home, take bank loans at much lower interest
rates.

Please do not delay your payments on credit cards. You
may not be knowing that the credit card companies can shame the “Shylock the
Jew” if you examine their late fees of your credit card.

an additional cost to you, when
many reputed banks are coming out with free credit cards.

Golden Rule No. 3: Be a long term Customer: If you are
financially conservative (and you should be, and if you are not, it is time you
become one) then select a reputed credit card company and stick to it following
Golden Rules 1 and 2.

Why? Are you aware of CIBIL? The Credit Information Bureau of India Ltd., the
only authorised body who are rating retail customers to get loans from financial
institutions across India. If you stick with credit card longer your credit
rating score improves and your chance of getting loan, and even a higher amount
of loan from the financial institutions become brighter.

Golden Rule No. 4: Never ignore reward
points. Reputed credit card companies at least give cash back of 2% on your
spending as reward points. Over a long period this is a good return and also a
good reduction of costs. Hence please keep track of the minimum cash back as
well as the seasonal higher cash back too and use your credit card judiciously
to maximize cash backs.

Golden Rule No. 5: Use your credit
period of 52 days to the maximum. This is possible if you use your credit card
in the beginning of your credit cycle. If your billing is from, say, 15th of the
month, please make maximum use of your card closer to 15th, (i.e., between 16th
to 25th of the month) and then reduce the use as much as possible. If you
practice it for few months, things will fall in line. The more usage is nearer
to 15th, the maximum free credit you get.

Well my dear friends, hope you will remember my 5 Golden
Rules and you will follow them at least 6 months (if you do so you will be doing
for ever) just calculate the savings and you will always thank yourself for
reading this piece today!!! Best of Luck!!!

DISCLAIMER: The views and opinions expressed in this article are those of the authors /contributors and do not necessarily reflect the official policy/opinion of webindia123.com / Suni systems Pvt. Ltd. Webindia123.com / Suni systems Pvt. Ltd and its staff, affiliates accept no liability whatsoever for any loss or damage of any kind arising out of the use of all or any part of the material published in the site. In case of any queries,or complaints about the authenticity of the articles posted by contributors, please contact us via email.